Michael Thomas Lee of Darien, Connecticut submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) in which he has been fined and suspended for allegedly engaging in an outside business activity in violation of FINRA Rules 3270 and 2010.
From June 2014 until February 2017, Michael Thomas Lee was registered with Kestra Investment Services (Kestra) as a General Securities Representative. According to the FINRA findings, Lee engaged in an outside business activity known as the Origin Fund, a prospective ETF fund, without notice or approval from his firm. The findings stated that Lee allegedly solicited potential investors and distributed written materials prepared by his business partner using his personal e-mail and an e-mail address associated with the fund. FINRA stated that although none of the individuals invested in the fund, the materials falsely represented that the Origin Fund was a hybrid registered investment advisor with $20 million in assets and that Kestra was sponsoring and providing services to the fund. In addition to those FINRA findings, Lee allegedly falsely attested his use of an undisclosed email address to conduct securities business on two annual compliance questionnaires.
FINRA Rule 3270 provides, in relevant part: “No registered person may be an employee, independent contractor, sole proprietor, officer, director or partner of another person, or be compensated, or have the reasonable expectation of compensation, from any other person as a result of any business activity outside the scope of the relationship with his or her member firm, unless he or she has provided prior written notice to the member, in such form as specified by the member.” A violation of FINRA Rule 3270 is also a violation of FINRA Rule 2010.
Without admitting or denying FINRA’s findings, Michael Thomas Lee was assessed a deferred fine of $12,500 and suspended from association with any FINRA members in all capacities for one year. The suspension is in effect from August 5, 2019, through August 4, 2020.
Stockbrokers have been known to engage in many practices that may violate industry and firm rules, practices, and procedures. In order to protect investors from stockbroker misconduct, FINRA rules require brokerage firms to establish and implement a supervisory system. The implementation of these industry rules requires supervisors to monitor their employees to ensure compliance with federal and state securities laws, securities industry rules and regulations, and the brokerage firm’s own policies and procedures. If broker-dealers and/or their supervisors fail to establish and implement these protective measures, they may be liable to investors for damages which flow from the broker’s misconduct. Therefore, investors who have suffered losses stemming from outside business activities, and/or other misconduct by their broker can file claims to recover damages against broker-dealers, like Kestra, which should consistently oversee its brokers’ activities in order to prevent the above-described misconduct.
Have you suffered losses in your Kestra Investment Services account due to misconduct by your broker? Was Michael Thomas Lee your stockbroker? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is accepting clients with valid claims against Kestra stockbrokers who may have engaged in broker misconduct and caused investors’ losses.
The most important of investors’ rights is the right to be informed! This Investors’ Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 40 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors’ rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at email@example.com for answers to any of your questions about this blog post and/or any related matter.